Inspector general to review Australian Tax Office risk of fraud

The inspector general of taxation has agreed to review the Australian Tax Office’s internal controls against the risk of fraud after one of its highest-ranking officers, Michael Cranston, was charged with alleged abuse of public office.

Ali Noroozi, the inspector general, says he will review the ATO’s practices and procedures “to prevent, detect and address” fraud or potential fraud within the organisation, and see how ATO staff are trained.

It follows the multimillion dollar tax fraud case – revealed in May – which led to the arrest of Cranston’s son and daughter, Adam and Lauren, who were allegedly part of a tax-fraud syndicate.

Michael Cranston resigned two weeks ago from his position at the ATO after being charged with two counts of abuse of public office for allegedly obtaining information and exercising influence to obtain a benefit for his son. He has had to face court in relation to the charges.

Separate from the criminal investigations, the ATO has frozen the assets of more than 60 parties believed to have some link to the scheme.

The Senate economics references committee, chaired by Labor senator Chris Ketter, last week requested Noroozi review the ATO in the wake of the scandal.

Noroozi accepted the request on Tuesday, and announced the terms of reference on Wednesday.

The review will be wide-ranging and will involve the Attorney General’s Department.

“The community is genuinely concerned about allegations of tax fraud, particularly where it may be linked to ATO officers,” Noroozi said on Wednesday. “The community expects very high standards of integrity from the ATO and its staff.

“No organisation is immune from the risk of fraud. Robust governance frameworks, regular risk assessment and appropriate controls along with a culture that promotes ethical behaviour are necessary to address risks of fraud and abuse of power.”

The shadow assistant treasurer, Andrew Leigh, told Guardian Australia he was pleased Noroozi had agreed to review the ATO.

“Maintaining the taxpayer’s trust is an essential part of a functioning system and this review will be an important step in ensuring that public confidence in the ATO is restored,” Leigh said.

“The recent arrests have highlighted the serious challenges the ATO faces in detecting and addressing fraudulent activity and back calls from Labor to give the office more tools to track down bad behaviour.”

The inspector general is an independent scrutineer agency of government, and its reviews are open and transparent and reported publicly.

Submissions to the IGT’s review are due by 28 July. They will remain confidential.